By: Jeff Chang
There are two ways in which state and local government employees can receive a “rude awakening” from the Social Security Administration: Through the application of the Windfall Elimination Provision and/or the Government Pension Offset.
Because the loss of a significant or, for that matter, any portion of your Social Security benefit is a serious thing, let’s start by clarifying who may be subject to these reductions and who is not. The WEP generally applies to employees who have worked both in a private or public sector position that was subject to Social Security and in a public sector position that was not subject to Social Security. You will not be subject to a WEP reduction of your Social Security benefits if you paid Social Security taxes on at least 30 years of substantial earnings (an indexed annual amount that was $23,625 for 2017 — less for prior years). By contrast, the GPO is a potential reduction in Social Security benefits that may be payable to a spouse or surviving spouse of a Social Security beneficiary. Like the WEP, the GPO applies to spouses and surviving spouses of employees who have worked both in a private or public sector position that was subject to Social Security and in a public sector position that did not pay into Social Security. The GPO will not be applied to reduce a surviving spouse’s Social Security benefit in situations where the surviving spouse has paid into Social Security, based on his/her own earnings for at least 60 months prior to becoming eligible for Social Security. Continue reading